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01 March 2011

The interesting thing about Ed Miliband and inequality …

The parts of Ed Miliband's speech that will be most prominent in news reports and political debates focus on the impact of spending cuts on families; who will lose what and how this will affect living standards. JRF is also very worried about that – although our concern is with those in or at risk of poverty rather than with those on ‘middle incomes’ (depending on how they are defined!). The parts of the speech that are actually more interesting are about the type of economic development and job creation we, as a country, want. In the current economic climate the concern for many people will be the overall number of jobs available. But if we are interested in reducing poverty, for the long term as well as in the next few years, we need to be equally worried about what kind of jobs they are.

Our recent response to the consultation on a new UK child poverty strategy looked at this. We noted that more than half of children in poverty are in households where someone is working. And one in seven is in a family where the adults work as much as might reasonably be expected (i.e. a lone parent working at least part time, or a couple where one works full time and the other part or full time. Moreover, only 56 per cent of households are lifted out of poverty when someone gets a new job. That might not be quite so worrying if those jobs led on to better prospects and to work that did eventually take the family out of poverty. However, in many cases that isn't true.

Our ongoing work looking at the future of the UK labour market has raised the issue of 'dual labour markets' in the UK. There is a split between a 'primary' labour market (where jobs tend to be more secure, have better conditions and progression routes as well as better pay) and a 'secondary' labour market (with jobs that are unstable, often short-term, with poor conditions and low pay). People get trapped in the secondary labour market and can't move into the primary one. It isn’t just skills and qualifications that prevent them moving into that world of better jobs and progression. It is also the networks they are part of, where they live, their employment history and references. How recruitment works means that these factors can prevent people moving towards the primary labour market even if they upgrade their skills.

In order to successfully tackle poverty (and the costs it brings to society, as well as to the individuals, families and communities concerned), it is vital that opinion-formers across the political spectrum think seriously about two questions:

How do we improve the quality of the jobs being created?

How do we increase access to those jobs among people who are currently shut out from them?

Ed Miliband talks a lot in this speech about inequality. The split between primary and secondary labour markets entrenches inequality and poverty. It also reduces the routes for social mobility, something that all political parties are worried about.

Tax incentives may or may not be a useful tool for this. They certainly won't be the whole answer. Businesses, the voluntary sector and governments across the UK all need to be involved in coming up with some more answers. And we need to get a move on.